Banking & Finance

The Incestuous Relationship Between Bankers, Business, and Congress

Originally published on November 7, 2012 on occupy.com

Reprinted on Truthout

If you look up the individual “Jon Corzine” on Wikipedia, the first sentence you encounter is “Jon Stevens Corzine is an American finance executive and political figure.”

Those two positions strung together in the same sentence may make some people uneasy, but the fact is that you can apply this description to many people in Congress. Looking closer, Jon Corzine may simply be the most poignant symbol of the incestuous relationship between bankers, business and Congress that is systemic in today’s political system.

Recently, Jon Corzine — CEO of MF Global from 2010 to 2011, CEO of Goldman Sachs from 1994 to 1999, Senator of New Jersey from 2001 to 2006 and Governor of New Jersey from 2006 to 2010 — was subpoenaed before a House committee to answer questions regarding the loss of approximately $1.6 billion of citizens’ money.

The “honorable” Jon Corzine, as his nametag so colorfully and inaccurately described him, claimed he did not know where the funds went. The House committee asked him, along with other MF Global executives: “Where is the money?” His response: “I don’t know.”

“OK,” replied the committee.

Could lawmakers’ passivity possibly be attributed to the amount of money those committee members received from financial agencies and trading groups to keep their mouths shut? Given the evidence, it’s a worthwhile question.

According to the Center for Responsive Politics, Committee chairman Spencer Bachus has received $262,177 from securities and investment firms, $78,677 of which was individual donations, the other $183,500 from PACs. He has also received $259,400 from commercial banks and $241,960 from insurance companies, a blend of PACs and individual contributions.

Open Secrets, the website of the Center for Responsive Politics, features a stunning chart demonstrating how the House Financial Services Committee as a whole has received an astonishing $11,425,875 from financial, real estate and insurance firms through PACs, and an additional $10,106,258 from individual contributions in the same fields.

But let’s go deeper — to those with even more power.

Earlier this year on June 13, Jamie Dimon — CEO of JP Morgan Chase, Class A director of the board of directors of the New York Federal Reserve, who worked at and helped to create the Citigroup mega-bank before he left it in 1998 — faced a Senate hearing over JP Morgan’s loss of more than $2 billion.

The Senate Committee on Banking, Housing and Urban Affairs has 22 members, and 18 of those members are either directly or indirectly invested in JP Morgan. In between the star-struck gazing, admiration and lax questions, only a handful of senators, including New Jersey Democrat Robert Menendez, managed to make Dimon slightly uncomfortable by asking difficult questions about the company’s malfeasance.

Many of the committee members’ aides are now lobbyists for JP Morgan or investment companies connected with them. For example, Naomi Camper, a committee chair aide from 2001-2004, and Kate Childress, former aide to New York Senator Charles Schumer, have been lobbyists for JP Morgan since 2008. JP Morgan has also helped fund the campaigns of a number of these same committee members.

According to the Center for Responsive Politics, Tim Johnson has received $81,335 from JP Morgan employees since 1998; Richard Shelby has received $136,771 from employees since 1990; and Mark Warner received $79,150 in 2012 alone. And one wonders why Dimon walked away without even a slap on the wrist.

Goldman Sachs, perhaps the most notorious of the investment banks on Wall Street and an emblem of the corruption of politics by big money that the Occupy Movement addresses, has also contributed to powerful committees and individuals in Congress. So let’s name a few.

House Speaker John Boehner and House Majority Leader Eric Cantor, for example, have both received large sums from Goldman Sachs, all the while having tens of thousands of their own personal dollars invested in the company — about $32,500 between the two of them, to be exact.

Boehner has received about $29,500 while Cantor has received about $48,150 from the firm. And these two are just a fraction of the 19 congressional members who have invested in the company for a sum total of about $812,000; in return the company has paid out about $124,000 in contributions to those candidates.

This is no less true for vice presidential candidate Paul Ryan, who has approximately $8,000 invested in Goldman Sachs and has received double that, or about $15,800, in campaign contributions from them. Though this is nothing compared to his running mate, Mitt Romney, who received a couple of thousand shy of $1 million from Goldman for the 2012 election.

Although President Obama didn’t receive much from the major banks for the 2012 campaign (Wells Fargo was the only big donor, at $289,000), in 2008 he received $1,013,091 from Goldman Sachs, $809,000 from JP Morgan Chase, $736,771 from Citigroup and $512,232 from Morgan Stanley, along with staggering contributions from the University of California, Harvard University, Microsoft, Time Warner, Columbia University, IBM, and General Electric. It’s likely the major banks considered their initial campaign contributions to Obama as a “long-term investment,” one that has paid off immensely: not a single executive from any of the major banks has been criminally prosecuted for their illegal and reckless behavior in the economic meltdown.

And this is the point: both Democrats and Republicans have taken enormous sums from the country’s biggest financial institutions, then repaid those institutions with policies that favor them. With congressional oversight committees under the thumb of the financial sector, banks have been allowed to pursue their fraudulent actions without repercussions. Finally, you don’t need to pay money to get what you want; you just need to hire the right people for influential positions in government. Just look at Obama’s cabinet, and the cabinet of previous presidents:

Tim Geithner – Current Secretary of the Treasury, formerly director of Policy Development and Review at the IMF (2001 to 2003) and president of the New York Federal Reserve Bank. In November of 2007 he rejected an offer to become Citibank’s chief executive.

Henry Paulson – Secretary of the Treasury under George W. Bush, former CEO of Goldman Sachs (1974 to 2006) and a member of Council on Foreign Relations.

William Daley – Previous Chief of Staff under President Obama (2011-2012), COO of Amalgamated Bank of Chicago, Midwest Chairman of JP Morgan Chase since 2004 and member of Council on Foreign Relations.

Jacob Lew – Current Chief of Staff under Obama, COO of Citigroup’s Alternative Investments unit since 2006, and member of Council on Foreign Relations.

Eric Holder – Current Attorney General, previously worked for Covington & Burling LLP, an international law firm that has represented multinational corporations such as Phillip Morris, Halliburton and Xe Services (now known as Academi, formerly known as Blackwater – a company that changed its name twice to dodge a dismal public relations record).

It should come as no surprise, then, to learn that the (In)justice Department and the SEC has dropped all criminal charges against Goldman Sachs for its involvement with the housing market crisis, despite having $1.3 billion worth of subprime mortgage securities on their portfolio.

The Senate report also documented e-mails that referred to these securities as “junk” and “crap.” The company was charged $550 million – a sum of money that is made in weeks.

The most naked example of how our political system has been robbed by the bankers and corporations is the fact that Green Party presidential candidate, Jill Stein, was arrested for attempting to enter the building where the second debate between Obama and Romney was being held.

Why should a woman who has consistently polled at 3% nationally and has raised enough money (yes, it is a criterion) to get on the ballot in 36 states not have a chance to have her voice heard with the heavy corporate hitters? Because the Commission on Presidential Debates, which sets the agenda for this nationally televised theater, accepts donations from corporations whose funds are contingent on the candidates only debating each other.

Certain topics are not raised in the debates, of course, among them climate change, banker bail-outs, campaign finance reform, Mexico’s U.S.-funded drug war, drone strikes, the illegitimacy of the National Defense Authorization Act, the FISA act, the Patriot Act, our treatment of government whistleblowers, the ongoing war in Afghanistan, etc. There is no point debating the issues, after all, if your party duopoly is in agreement.

It’s more than a revolving door we’re talking about. It’s an incest fest. And it’s at times like these that I, and many others, ask: What Would Jesus Do? He explained to us in John 2:15-16 exactly what he would do: “in the temple courts He [Jesus] found men selling cattle, sheep, and doves, and others sitting at tables exchanging money. So he made a whip out of cords, and drove all from the temple area, both sheep and cattle; he scattered the coins of the money changers and overturned their tables. To those who sold doves he said: ‘get these out of here! how dare you turn my Father’s house into a market!'”

We, too, must drive the “money changers” out of our political temple before we can rationally and peacefully progress into the 21st century. This starts with a constitutional amendment to repeal the Citizens United ruling of 2010; the elimination of PACs and super-PACs; and imposing extreme limits, with complete transparency, on all political donations and contributions.

Either this, or we apply our savage consumerist mentality in the most practical sense to our political system: when something breaks, don’t fix it. Throw it out and get a new one.

Ramble: It’s a Big Club and You Ain’t In It

Originally published on December 19, 2012 on occupy.com

In his 2006 HBO special “Life is Worth Losing,” George Carlin presciently noted: “They call it the American dream, because you have to be asleep to believe it.”

With stunning tact and foresight, Carlin predicted much of what is happening today, including “increasingly shittier jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime, and the vanishing pension that disappears the minute you go to collect it, and now they’re coming your Social Security money, they want your (fucking) retirement money. They want it back, so they can give it to their criminal friends on Wall Street, and you know what? They’ll get it from you, they’ll get it all from you sooner or later, because they own this (fucking) place. It’s a big club, and you ain’t in it.”

He’s right. So are the Occupy activists who point to the extreme economic polarization in this country. We are now faced with the reality that 1% percent of our nation controls about 43% of our wealth, our taxpayer dollars bailed out corrupt financial institutions that engaged in reckless behavior which resulted in millions of Americans losing their homes, and now, the reality that politicians are seriously considering cutting programs such as Social Security and Medicare as a solution to the budget problem.

There have been many steps that have led us to this current predicament – and our elected officials are hugely to blame for expediting the process. Because politicians have become no more than actors employed by special interests, the “big club” has had the political assistance required to deregulate the economy and pave the way for their pseudo-monopolies and tax-dodging cartels.

A few key repeals include the Glass-Steagall Act, which contained provisions that segregated commercial banks and investment banks; relaxing the Sherman Antitrust Act, which outlawed trusts; the Clayton Anti-Trust Act, which augmented the Sherman Antitrust Act and made room for unions; and the Robinson-Patman Act, which outlawed price discrimination (but exempted cooperative associations).

To point to a significant example, the Glass-Steagall Act is what would have prohibited Citicorp, a commercial bank, from merging with Traveler’s Group, an insurance company, to form Citigroup in 1998, a conglomerate vastly involved in the current mortgage crisis. The Federal Reserve gave Citigroup a temporary waiver that year, while their political stooges were working on the next piece of legislation: the Gramm–Leach–Bliley Act of 1999, which allowed security firms, investment banks and commercial banks to merge. The bill was signed into law by President Bill Clinton.

This was the same President that signed the Commodity Futures Modernization Act, which deregulated OTC derivatives and credit default swaps, paving the way for the investment banks, now consolidated with commercial/consumer banks, to tie their sub-prime mortgages into the derivatives without government oversight or regulation and sell them on our casino-capitalist market.

Let us not forget who the Treasury Secretary was under the Clinton administration: Robert Rubin, an employee of Goldman Sachs for 26 years, and who served as a member of the board as well as the co-chairman from 1990 to 1992.

After he left the Clinton administration, Rubin continued to serve on the board of directors of many entities such as the New York Stock Exchange, the Harvard Corporation, the Ford Motor Company, the Council on Foreign Relations and, most importantly, his own brainchild: Citigroup. During his tenure at Citigroup, Rubin made an estimated $126 million in stock options and cash. It was also under his watch that the federal government injected about $45 billion into the company.

Speaking of TARP, who was leading the rallying cry for the bailouts? Then-Treasury Secretary Hank Paulson, a former CEO of Goldman Sachs. The TARP bailout was a perfect illustration of how our tax dollars don’t go towards improving infrastructure and eradicating poverty, but to propping up corrupt financial institutions, formed through deregulation, to continue their criminal activity.

Deregulation has led to a strip mall in every rural town, a Walgreen’s on every corner, a McDonald’s at every stoplight, a Starbucks on every block, a Wal-Mart on every three-acre plot, and a Home Depot on an area that used to include many family hardware stores.

You name the industry – retail, telecommunication, Internet, food, home repair, goods and services – and increasingly only a few companies are controlling and dominating them. There used to be family-owned stores, flower shops, pharmacies and hardware stores. Now the road is paved only for those on the inside: the big club.

To be part of the “big club” is also to be absolved of any criminal activity. When faced with a conviction or accusation that would warrant a criminal prosecution for the everyday citizen, those in the “big club” get off with a fine amounting to a few weeks or months of profit, paid to a government that in exchange lets the criminals go free.

This is illustrated with the recent finding that HSBC Bank laundered and processed about a billion dollars of drug money of some of the most notorious and dangerous drug cartels in Mexico. They paid a good amount as retribution, $1.9 billion, but not a single individual was criminally indicted or convicted for their activity.

With alarming boldness, Assistant Attorney General Lanny Breuer declared that “despite HSBC’s ‘blatant failure’ to implement anti-money laundering controls and its willful flouting of U.S. sanctions, the consequences of a criminal prosecution would have been dire. Had the U.S. authorities decided to press criminal charges, HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”

The federal investigation even revealed that “senior bank officials were complicit in the illegal activity.” You know you’re in the big club when the sanctity and ubiquity of your institution will never be sacrificed by thorough, blatant and disgraceful criminal activity.

Goldman Sachs, when faced with trial, paid a petty $550 million fine for misleading investors with sub-prime mortgage products, and thus avoided criminal prosecution. MF Global, an institution that lost about $1.6 billion of consumer money, got off with no criminal prosecution or indictment. JP Morgan, which lost billions of dollars in trading, was let off with no criminal indictment or prosecution. British Petroleum was charged with manslaughter for their negligence regarding the Deepwater Horizon explosion, but no one was sent to jail for the incident. The list goes on: no time for the white-shoe boys – even if you’re found, like HSBC, having violated the Trading with the Enemy Act.

The situation has become so neurotic that a group of CEOs, posing as rational and well-intended people, have formed a political campaign known as Fix the Debt comprised of the wealthiest and most powerful CEOs on the planet. On their list of solutions, you’d expect to find perhaps a mirror or a magnifying glass to more closely examine their tax returns. No such luck: the only thing on their list is our retirement money and our future health care money that we pay into.

So, at a time in history when these institutions have gotten away with so much already, we as citizens must decide if we are going to accept the lie that “entitlement programs,” as they’re referred to, are actually posing the gravest threat to our massive $16 trillion debt. With middle-class incomes collapsing and jobs coming with less and less decent wages and benefits, we must not let our politicians sacrifice the programs that were built to help us.

“Austerity” is code for a banking takeover

Originally posted on October 29, 2012 on occupy.com

What is austerity? A dictionary definition will provide you with the definition of a “strict economy.” It will also provide you with an antonym: leniency. Although the current austerity practices in Europe, the U.S. and elsewhere certainly match those definitions, the implications of enforcing these measures against the will of the majority population — and imposing them as a rational solution to the socioeconomic problems we face — are far graver, dangerous and outright scary.

Let’s examine the conditions of the loans aimed at getting countries (like Greece and Spain) out of debt: they want to raise the retirement age, increase the work day and have people work for lower wages, cut funding to education, maintenance and other important public sector areas, cut Social Security, cut pensions, and even privatize the municipal water and electric systems.

But at least the measures are democratic, right? Wrong. These austerity policies have been entered into and implemented despite resounding political opposition. Almost weekly protests all over Europe have been gathering outside centers of governmental power with signs like “No Nos Representan” (They Don’t Represent Us), or scissors with a slash through it, or the European Union flag peeled away to reveal the flag of Nazi Germany, or “No es la Crisis, es el Sistema” (It’s not a crisis, it’s the System). And many just plain and simply read: NO. And you call this government by the people’s consent?

When austerity measures were first introduced in Greece, George Papandreou, the prime minister at the time, attempted to hold a referendum for the acceptance of the bailout deal but was pressured to resign. He was replaced almost immediately by Lucas Papademos, who was governor of the Bank of Greece from 1994 to 2002 and became vice president of the European Central Bank from 2002 to 2010.

Thus in Greece, the “cradle of democracy” was robbed by bankers. And what does Christine Lagarde, head of the cleverly re-named International Mafia Foundation (IMF), have to say about it? “Pay your taxes. I have more sympathy for children in sub-Saharan Africa.”

A similar situation happened in Italy. Silvio Berlusconi, who was sentenced last week to four years in prison for tax fraud, proposed a referendum to accept the austerity package that was proposed in his country at the time. Under pressure from Congress and from population, he resigned and was replaced by Mario Monti, former European Commissioner from 1995 to 2004, and the minister of economy and finance for two years. The austerity measures were implemented.

One result of these austerity measures is that they give rise to dangerous, desperate and misguided ideologies just as the situations are becoming more unsustainable in those countries. For example, the Golden Dawn, an ultra-right, ultra-nationalist party that rails against immigrants now has approximately 14 percent of Greeks’ support, twice as much as it did in June when Greece elected 18 of its party members to Parliament.

It’s sometimes difficult to understand how economic instability in Europe affects us in the United States; easier to dismiss them as being across the Atlantic, and left to solve their own problems. But their actions do affect us, they can have severe consequences, and vice versa. The LIBOR scandal, for example, should be the number one story of this year. The key banks that receive the LIBOR rate were manipulating that basic interest rate upon which student loans, car and credit card loans are based all over the world; they knew which way the rates would go, then made bets on them.

Essentially, the crisis “over there” has great parallels to our own in the U.S., where a few major banks knowingly sold sub-prime mortgages and mortgage-backed securities, treating them as AAA products when they were far from it, and insured these securities with institutions such as AIG. When the housing bubble burst, the bankers didn’t want to pay for their lost bets and insurances so they created a scheme to dump it on the taxpayers. To a large extent they’ve succeeded because of our compliance and refusal to study the issue.

Let’s be clear: there is no easy way out of the so-called crisis. The euro has lasted but 10 years. Under our current rigid, unforgiving, global dynasties of bankers and corporations that comprise the economic and political elite, the solution will always be to remove money from the public sector and the working person, to print more increasingly worthless electronic money, to sign away people’s sovereignty and basic human rights, and to centralize power.

But if we, the people, choose to actually look at and study the problem, it isn’t that there aren’t enough funds. It’s that our money is being allocated and distributed in bluntly unethical ways, funneling toward fewer and fewer people while populations bail out the very criminal enterprises that took us down.

And what’s most frightening and discouraging is that these policies — the ethics of austerity — are being entered into undemocratically, that is, without the support of the citizens they are ostensibly being designed to serve. So let’s say it like it is. Let’s call a spade a spade: through “austerity,” international bankers and corporations are imposing economic neo-feudalism on us all, by seizing the governmental levers of power and using that power to craft legislation and social policy that benefit those corporations and bankers, while rendering the everyday citizen powerless.

The question is, once we understand and openly recognize this truth, what are we going to do about it?